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When Will Oil Bounce Back?

When Will Oil Bounce Back?

After weeks of extremely volatile…

After Two Oil Train Derailments Canada Imposes Lower Speed Limits

Oil train 2

A second oil train derailment in Saskatchewan in two months has prompted the federal Canadian government to enforce lower speed limits for trains carrying potentially dangerous goods.

Reuters reported that the speed limit would be 25 mph for all trains carrying more than 20 cars of dangerous goods. The limit will be in force for 30 days.

“I realize there will be an effect on the economy of the country ... but it is very, very important that we do not sacrifice safety,” Transport Minister Marc Garneau said.

“To have two major derailments that are incredibly serious is something that is almost incomprehensible,” an MP for the Moose Jaw—Lake Centre—Lanigan constituency where the accidents occurred said, as quoted by the Toronto Sun. “I am not a big believer in coincidence, and this seems to be that it’s more than just coincidence.”

The first derailment occurred in December, when some 19 cars went off the rails and some 1.5 million liters of crude oil leaked out. In the second accident, more than 30 cars went off the rails, with a dozen of them catching fire.

Oil train traffic in Canada has increased because of the opposition to the Trans Mountain pipeline expansion project that has delayed the start of work. The expansion might never get built, which means there will be even more oil trains running across Canada to transport the growing output of heavy crude to markets.

In early 2019, then-premier Rachel Notley said Alberta would spend $2.78 billion (C$3.7 billion) on leasing 4,400 additional rail cars to transport some 120,000 bpd of heavy crude to the market. Total volumes of oil moved by rail out of Alberta last year hit a record, and this year’s volumes are seen even higher since the pipeline network can’t cope with the oil being produced. This would mean a greater risk of derailments simply because of the number of trains that will be on the railroads.

By Irina Slav for Oilprice.com

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